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Urging “Caution,” FTC Comments on FCC Debt Call Carve-Out

Weighing in on the Federal Communications Commission’s proposed carve-out for permissible robocalls made for debts owed to the federal government, the Federal Trade Commission encouraged its sister agency to “proceed with caution.”

Last month, the FCC initiated a rulemaking proceeding pursuant to the Telephone Consumer Protection Act to implement an amendment to the statute included in the 2015 Bipartisan Budget Act for calls made in connection with “a debt owed to or guaranteed by” the United States.

Commenting on the Notice of Proposed Rulemaking (NPRM), the FTC referenced its “extensive experience” related to debt collection and telemarketing and suggested the FCC move slowly. “The FTC’s experience shows that debt collection calls and robocalls raise significant consumer protection concerns and are often vehicles for abusive, deceptive, and unfair business practices,” the staff of the FTC’s Bureau of Consumer Protection wrote. It recommended “that the FCC attempt to harmonize its rules as much as possible with existing laws governing debt collection and telemarketing.”

Section 5 of the Federal Trade Commission Act, the Fair Debt Collection Practices Act (FDCPA), and the Telemarketing Sales Rule (TSR) all contain extensive restrictions governing when and how debt collectors can call consumers to collect debt, the agency said, and to the extent possible, “the FCC should create standards for the collection of government debt that are consistent with these existing laws.”

According to the FTC, consumer complaints document that consumers are “regularly barraged” with unwanted calls, which often occur in the context of debt collection. On top of these issues, government imposter frauds are on the rise. Historically, consumer protection agencies have advised consumers that the federal government will not call without first sending a letter, but because the TCPA amendments now allow robocalls to collect a debt owed to the U.S. government, it will be more challenging for consumers to distinguish between legitimate debt collection calls and scam attempts.

Debt collection robocalls themselves raise a number of distinct consumer protection issues and raise problems under the FDCPA. They include “dead air” or “hang up” calls, and unlawful disclosures made to third parties when someone other than the debtor answers the calls, both problems that run headlong into the FDCPA.

“These consumer complaints suggest that the FCC should exercise caution and restraint in this robocall rulemaking,” the FTC wrote. “These calls strike many consumers as abusive and harassing, particularly when they are frequent, and their use in debt collection threatens consumer privacy and poses significant compliance challenges under the FDCPA. FTC staff urges the FCC to adopt implementing regulations that mitigate as much as reasonably possible the risks of law violations and consumer harms associated with robocalls.”

Addressing specific questions posed by the FCC in the NPRM, the FTC proposed that robocalls should be limited only to collect debts in “default,” from those persons who actually owe the debt, to the federal government and not any other.

These standards would harmonize the regulation with existing laws such as the FDCPA and avoid expanding the amendment beyond what Congress intended. “The NPRM notes that the FCC is considering allowing robocalls ‘concerning other debts or matters about which the caller may want to speak with the debtor,’ ” the agency wrote. “FTC staff sees no justification for such an extension in the TCPA amendment enacted by Congress,” which permits collection robocalls “solely to collect” a covered debt or “solely pursuant to the collection” of a covered debt.

Similarly, the FCC should limit the definition of “debt servicing” to exclude calls that solicit fees or consideration for the goods or services, the FTC said. Otherwise, consumers could face robocalls “using the collection of government debt as a Trojan Horse to engage in otherwise prohibited sales calls regarding additional products or services or engage in the collection of non-government debts,” the agency cautioned. A broader definition could also run counter to the TSR.

The FTC also advocated that call recipients receive privacy protection and suggested that the FCC should require that reasonable security be maintained over the data collected during calls and that the information obtained during a covered call should be used solely for purposes of collecting debts on behalf of the government and for no other purpose. Such a use restriction is consistent with the scope of the TCPA amendment as well as consumer expectations, the agency said.

For additional protections, consumers should be provided with the power to stop robocalls at any time and be informed of this right, the FTC advised. Calls should only be permitted between the hours of 8:00 a.m. and 9:00 p.m., and debt collection callers should be required to transmit Caller ID information that includes a caller number that connects to a live agent representing the debt collector.

Why it matters: The FTC’s comment emphasized caution, and urged the FCC to limit the scope of the regulation and harmonize it with existing laws, including the FTC Act, the FDCPA, and the TSR. Warning of the dangers of robocalls, debt collection calls, debt collection robocalls specifically, and the rise of government impersonation scams, the FTC advised the FCC to “proceed with caution, and only incrementally, with any expansion of permissible robocalling.”